From "Isolation" to "Integration": After five years, Standard Chartered considers "reclaiming" Zodia Custody

Byline: Yangz, Techub News

In 2020, when most traditional financial giants still viewed cryptocurrencies as a “compliance minefield,” Standard Chartered Bank, through its venture capital arm SC Ventures, incubated Zodia Custody. It was a major breakthrough, but at the time, Zodia was more like a “ward” deliberately fostered outside the system. It carried Standard Chartered’s bloodline, yet was placed behind a firewall of an innovation experiment, kept at strict “distance” from its parent company.

However, more than five years later, this long “fostering experiment” now seems to be reaching its end.

According to a report by Bloomberg citing people familiar with the matter, Standard Chartered is considering a “partial acquisition” of Zodia, integrating its core business into the bank’s investment banking division, while Zodia Custody would continue operating as an independent crypto-assets custody software-as-a-service company. Given the relationship between the two, this is clearly not a simple adjustment to the equity structure—it’s more like a carefully considered “return of the foster child to the family.” As global crypto regulation becomes increasingly clear, and as Wall Street’s rivals rush to stake their claims in the crypto race, Standard Chartered has clearly realized that crypto-assets custody is no longer a mere marginal experiment, but one of the indispensable core cornerstones of its future financial “headquarters.”

The birth of Zodia

To understand the weight of this “return to the family,” we first need to go back to 2020, when Zodia was born.

That year, cryptocurrencies were still regarded as an “outsider” roaming in regulatory gray areas by the vast majority of traditional finance practitioners. But it was also in that same year that MicroStrategy made a decision then viewed as crazy—adding Bitcoin to its balance sheet. The stone thrown into the lake made institutions with sharp instincts realize that undercurrents had already begun to form.

However, the market at the time still faced an awkward gap: those pension funds, hedge funds, and insurance companies that managed billions of dollars could not easily find a “qualified” custodian—even if they were coveting returns from crypto assets. Back then, exchange wallets were convenient, but under the scrutiny standards of traditional finance, asset segregation, private key management, bankruptcy protection, and audit compliance were practically everywhere minefields.

Standard Chartered saw this opportunity, and it also understood the risks involved.

So instead of operating crypto-asset custody directly under a banking license, it adopted a highly cautious “off-balance-sheet incubation” model. In December, Standard Chartered, together with U.S. asset services giant Northern Trust, jointly established Zodia Custody. The name comes from “Zodiac,” meaning the twelve zodiac constellations. In other words, Standard Chartered hoped Zodia could become a coordinate system for institutional investors in the crypto era—like the fixed stars in the night sky.

As Standard Chartered had hoped, in the five years after its founding, Zodia expanded rapidly. It brought in top-tier financial institutions such as Japan’s SBI Holdings, Australia’s National Australia Bank, and the National Bank of the United Arab Emirates as shareholders, and “placed its pieces” across seven major financial hubs—including London, Singapore, China Hong Kong, Abu Dhabi, and Luxembourg. Its service base spans crypto-native funds, asset-management powerhouses, and even sovereign wealth funds. Zodia used facts to prove that a bank-origin compliance custodian can indeed thrive in the wild world of crypto.

So if Zodia is doing well, why is Standard Chartered now planning to “bring it back under the main house”? The answer may be this: in the “first half” of the experiment, security is the top priority; while in the “second half,” efficiency and capital utilization are what decide the outcome.

Why now?

In fact, the “overlap” between Standard Chartered and Zodia’s business operations has already started to show.

In January 2025, Standard Chartered launched its own digital-asset custody service in Luxembourg. That same summer, it also rolled out crypto trading services for institutional clients. Both lines of business overlap clearly with Zodia Custody’s custody services—and even with the trading services of another wholly owned subsidiary, Zodia Markets.

When a group has a “left and right hands fighting each other” situation internally, dilution of resources and loss of efficiency become unavoidable. This may well be the internal motivation behind Standard Chartered’s decision to “reclaim” Zodia. Externally, there are also two major trends that cannot be ignored.

First is a qualitative change in the regulatory environment. Over the past five years, the biggest change in the crypto industry has not been the rise and fall of Bitcoin’s price, but the establishment of rules. With the implementation of the U.S. “GENIUS Act,” the progress of the “CLARITY Act,” the EU’s MiCA taking effect, and clear legislative frameworks being rolled out in places such as Hong Kong, the crypto industry is moving from “gray zones” into “under the spotlight.” Greater regulatory transparency greatly reduces the legal risks for banks to directly participate in crypto businesses, and also makes this kind of risk-avoidance model—off-balance-sheet incubation—no longer necessary.

Second is the intensifying competitive landscape. Custody services are becoming the main battleground that Wall Street is fighting over. State Street, Bank of New York Mellon, Citibank, Morgan Stanley… almost all major financial institutions are accelerating their deployment in the crypto-assets custody track. At the same time, crypto-native service providers like Coinbase and BitGo are continuously upgrading compliance standards, trying to take a slice of the institutional-client pie from traditional banks.

Faced with this “attack from both ends” situation, Standard Chartered obviously cannot keep letting Zodia “fight on its own” in business. Re-internalizing the core custody business into the bank means Standard Chartered can integrate resources, eliminate internal inefficiencies, and offer institutional clients one-stop services—from fiat currency accounts to crypto custody, and from trade execution to financing and settlement. Therefore, this “foster child returns to the family” drama will most likely soon begin. According to people familiar with the matter, the plan may be formally announced as early as this month.

Conclusion

Five years ago, Zodia, as a “foster child,” was placed outside the system because crypto assets were still on the fringes, regulation was not yet clear, and Standard Chartered needed to protect itself with a firewall. At that time, Zodia played the role of a “pathfinder”: it helped Standard Chartered test the waters and helped traditional finance explore the rules for entering the crypto world. Five years later, Zodia proved itself through global expansion and backing from top shareholders: institutional-grade compliant custody is not only a viable path, but also a ticket that grants entry into the on-chain financial world.

For Standard Chartered, this “foster child returns to the family” drama is only just beginning. And yet the story between the two reflects, in a truly real way, three stages in how traditional finance relates to the crypto world: isolation, probing, and integration. At first, traditional finance treated crypto as an outsider and kept it separated with a firewall; then, by incubating independent entities, it cautiously touched the boundaries; and finally, when the rules became clear and the model matured, crypto moved from the fringe into the core—becoming part of the financial infrastructure.